Connecticut needs to make significant changes in a wide range of areas–including education, transportation, export strategy, regulatory systems and its very business base–if it hopes to break a growing cycle of jobless recoveries, a panel of economic experts said Thursday.
“You have every reason to expect success,” Harvard Business School Professor Michael E. Porter told a crowd of several hundred gathered in the Connecticut Convention Center ballroom. “You have some of the best assets of any state in America. … You have to work on the fundamental things that have been neglected.”
It’s been more than a decade, Porter said, since Connecticut focused its resources to enhance the “business clusters”–a network of inter-related, growing industries centered in a geographic region. Clusters, which require adequate transportation networks, a trained workforce, access to capital and partnership with research institutions, tend to respond by attracting even more talent, business and capital to the region where they are located, he said.
This leads to a second underlying problem.
While other states find most job growth comes from 70 or even 80 percent of their respective economic bases, Connecticut–which relies heavily on the finance, aerospace and the gaming fields — gets the bulk of its job growth from about half of its base, said Steve Cochrane, an economic analyst with Moody’s Analytics, a Wall Street-based credit and bond rating agency.
State government can address this lack of diversity by helping Connecticut businesses reduce their over-reliance on European markets for their exports, and increase sales in emerging economies, said Mitch Horowitz, managing director of Battelle Technology Partnership Practice, an Ohio-based international economic development consulting group.
“Global competition is irreversible and it defines what we are and what we’re going to be,” he said.
Connecticut’s lack of diversity and poor positioning in the international market is compounded by a national shift in the demand for workers with more education.
While the job market rebounded relatively quickly during recessions in the first 4 1/2 decades after World War II, since 1991 unemployment has rebounded much more slowly than business productivity with each succeeding downturn, said Bryan Hancock, a principal with McKinsey Global Institute, an international economic development research think-tank.
The nation isn’t likely to regain all jobs lost in the last recession before 2016, Hancock said.
Most areas of job growth in the last two decades require at least some college education, leaving Connecticut and other states with a large surplus of unemployed workers with only a high school diploma.
That means not only investing in public colleges, universities and other research institutions, but “relentlessly improving the public education system” and reforming community colleges to allow their curricula to adapt more quickly to employers needs, Porter said.
Robert Kennedy, Gov. Dannel P. Malloy’s recent choice to become the first president of Connecticut’s Board of Regents for Higher Education–the new organization merging community colleges and the state university system–conceded that “job openings don’t necessarily match up with graduates.”
Kennedy added that “we’re not well known for being terribly nimble,” and the state’s community colleges should examine why there’s been a growing decline in students taking courses to prepare them for work in skilled industrial operations.
Both University of Connecticut President Susan Herbst and Yale University Vice President Bruce Alexander predicted the recent state partnership with Jackson Laboratory to develop a $1.1 billion bioscience research center in Farmington would attract both more talented researchers–and more businesses looking to collaborate–to Connecticut.
“It’s also very much about Yale, Trinity, Wesleyan” and others, Herbst said. “We can poach great scientists and their entire labs. We now have something incredibly attractive for scientists.”
“In today’s knowledge-based economy, development starts with great research universities,” Alexander said, adding that while Yale is primarily know for its cutting-edge research in life sciences, it launches a wide array of businesses annually by linking researchers with entrepreneurs.
In recent years it has launched everything from an online marketplace for eco-friendly wedding projects to an initiative by three undergrads that now outsources financial services to universities, employing 230 people in New Haven’s science park.
Porter praised Malloy and the legislature for taking a difficult-yet-crucial first step toward job growth: Getting state government’s fiscal house in order by closing a budget deficit projected as high as $3.67 billion for 2011-12.
Those budget-balancing decisions included more than $1.6 billion in new state and local taxes this year and a matching amount of state employee concessions across two fiscal years.
Without fiscal stability and sustainability, Porter said. “it’s very hard for anything good to happen in the economy. It’s simply a precondition for economic growth and building anything good in the state.”
State officials praised the advice afterward, but added that they believe Connecticut already is headed in the right direction.
“It was very affirming because a lot of the strategies we heard as being put into play now,” Catherine Smith, said commissioner of the Department of Economic and Community Development.
“I think it reinforces the direction we’ve been heading in for the last two years,” added Sen. Gary D. LeBeau, D-East Hartford.
But Oz Griebel, head of the Greater Hartford Metro Alliance, said having an effective economic development playbook delivered concisely to dozens of state officials at once was significant on its own.
“The important thing to me,” he said, “is that the event occurred. I think it underscored what many of us have been calling for for the better part of a decade.”
Most of Thursday’s speakers also emphasized a need to reduce Connecticut’s extensive network of business regulations, an argument that state officials also have begun to make more loudly since Malloy first announced plans in June to hold a special legislative session in October to promote job growth.
“Getting rid of unnecessary business costs, investing in transportation, higher education — these are all important,” said Joseph F. Brennan, senior vice president of the Connecticut Business and Industry Association. “I was glad to hear it again.”